Billionaires: Gautam Adani considers buying Anil Ambani’s bankrupt coal plants

In our fortnightly round-up of the world's super wealthy, Zara owner Amancio Ortega becomes landlord to Walmart in California and Jack Ma’s wealth drops $4.1bn as Ant’s valuation is slashed

If Gautam Adani wins the Vidarbha Industries power plant, it would add to his conglomerate’s growing portfolio of coal power projects. Reuters
Powered by automated translation
An embedded image that relates to this article

Gautam Adani

Billionaire Gautam Adani is weighing up a bid for a coal-fired power plant belonging to beleaguered Indian tycoon Anil Ambani that is currently being auctioned by lenders, according to sources.

Mr Adani, fresh from a $2.8 billion capital raising, may face intense competition for Vidarbha Industries Power, which operates the 600-megawatt generation unit in central India, the sources said. Lenders to the plant are driving the sale process, they added.

Mr Ambani’s Reliance Power is also considering making an offer for the asset in an attempt to win back control of the company, one of the sources said.

Deliberations are continuing and Mr Adani and Reliance Power could yet decide not to proceed with formal offers, they added.

If Mr Adani wins the plant, it would add to the conglomerate’s growing portfolio of coal power projects as it attempts to recover from a devastating short-seller attack by Hindenburg Research in January, which erased more than $150 billion from the group’s market value at one point.

The auction of Vidarbha Industries to another company would also mark the further diminishment of Mr Ambani, a former billionaire who has been battling creditors for years and fought a bitter succession battle with Mukesh, his elder brother and Asia’s richest man.

While Mr Adani is looking to expand his core fossil-fuel projects, sources said Bain Capital and Carlyle Group are among potential bidders for a controlling stake of his shadow bank Adani Capital, as he looks to conserve cash and focus on key businesses.

Separately, Mr Adani’s flagship company raised 12.5 billion rupees ($152 million) through notes, its first such local currency bond sale since it was targeted by Hindenburg Research in January.

Adani Enterprises raised funds last week by privately placing the notes, the company said in an exchange filing. The three-year notes are unrated and carry a coupon of 10 per cent, according to data compiled by Bloomberg.

The fund-raising is the latest attempt by the ports-to-power conglomerate to shore up investor confidence after months of damage control. It has denied Hindenburg Research’s allegations of widespread corporate malfeasance, which sent the group’s stocks and bonds tumbling.

Meanwhile, the conglomerate has improved its key debt metrics as it continues to restore investor confidence.

Adani Group’s net debt to earnings before interest, tax, depreciation and amortisation improved to 3.27 times at the end of March compared with 3.81 times a year ago, while cash balance rose to 403.5 billion rupees, the company said in a report last month.

Amancio Ortega

Amancio Ortega, the billionaire founder of the Zara clothing chain, is expanding his network of warehouses in the US with the acquisition of a new logistics centre in California.

Mr Ortega’s family office has paid $109 million to acquire the centre in Inland Empire, a logistics hub east of Los Angeles, from LBA Realty, according to a company representative, who confirmed details published earlier by the Commercial Observer. The warehouse is used by Walmart.

The deal comes on the back of Mr Ortega’s investment vehicle Pontegadea’s $900 million foray into US logistics last year, which marked its entrance into the sector.

Mr Ortega acquired his first European warehouse in the Netherlands last month, in a deal valued at €105 million ($115.2 million).

Over the past two decades, Pontegadea Inversiones has spent billions of euros on landmark properties around the world from Meta Platforms’s headquarters in Seattle to an office building leased by Royal Bank of Canada in Toronto.

More recently, the company has been investing in luxury apartments in cities including Dublin and New York. It also owns stakes in energy and telecoms infrastructure businesses. Acquisitions this year include a residential building in Dublin and former BBC offices in London.

Mr Ortega’s property portfolio is the largest among Europe’s super-rich individuals. It was valued at €15.3 billion as of 2021, according to the most recent data available.

Jack Ma

Jack Ma’s fortune is dwindling further as a planned repurchase of shares reveals a much reduced valuation for Ant Group, the payments business he co-founded.

The 58-year-old tycoon has a 9.9 per cent stake that’s now estimated to be worth $4.1 billion less than almost a year ago, based on the share buyback, average analyst estimates and Fidelity Investments’ valuation, according to the Bloomberg Billionaires Index.

Once China’s richest person, Mr Ma could now be worth about $30 billion, less than half of his peak fortune before the derailing of the world’s biggest initial public offering in 2020, according to Bloomberg’s wealth index.

Chinese authorities said they would wrap up a probe of Ant, with the company paying a fine of almost $1 billion.

The financial technology company has had to overhaul its business model. Its valuation, envisioned at roughly $315 billion after the IPO, has dropped to about $78.5 billion with Ant’s proposed share buyback.

“Ant might need to rebuild its profit base as its 2022 earnings almost halved from 2020, despite the likely end of the regulatory probe, which could delay its plan to relaunch its IPO,” Francis Chan, a senior analyst at Bloomberg Intelligence, said. “We calculate its value at just $24 billion to $60 billion.”

Mr Ma, who is also co-founder of Alibaba Group Holding, gave up controlling rights in Ant in January as he further retreats from his online empire.

In its 2022 annual report, Alibaba reaffirmed that Mr Ma’s direct and indirect economic interest in Ant Group “will be reduced over time” to a percentage that doesn’t exceed 8.8 per cent.

The former English teacher returned to his hometown of Hangzhou to visit a school in March, after spending years travelling overseas since the government cracked down on private sectors.

He’s still China’s fifth-richest person, according to the Bloomberg index, which tracks the world’s 500 wealthiest people.

Fidelity trimmed its valuation estimate for Ant to about $63.8 billion as of the end of November. The FinTech giant recorded a 56 per cent slump in quarterly profit in the three months ended December 31, a May regulatory filing shows.

Mr Ma’s interest in Ant is based on his ownership in Hangzhou Junhan and Hangzhou Junao, two limited partnerships that mainly count Ant executives as shareholders, according to a Bloomberg analysis of the company’s 2020 IPO prospectus.

The buyback plan would allow Ant’s existing shareholders to sell as much as 7.6 per cent of its equity interest, granting a way to cash out part of their investment.

The individual limited partners of Junhan and Junao decided not to participate in the Ant buyback out of the long-term commitment to the company.

Shiv Nadar

Indian billionaire Shiv Nadar’s HCL Technologies is acquiring a German automotive engineering services company for $280 million to push beyond IT consultancy into expertise in self-driving vehicles.

India’s third-largest IT services company said it agreed to buy all shares of ASAP Group, which specialises in autonomous driving and e-mobility. The sale is expected to be completed in September if the deal gets regulatory approval, HCL Tech said.

HCL Tech is following a push by India’s more than $245 billion software services sector into higher-margin operations requiring more technical know-how.

A leader in engineering research, the South Asian nation is boosting investment in sectors such as telecoms, transport and aerospace, according to a KPMG report.

“This investment also reinforces our commitment to Germany, which is a focus market for us,” said Hari Sadarahalli, corporate vice president of engineering and R&D services at HCL Tech.

ASAP provides software, consulting and testing services to car makers and their suppliers around Europe, and HCL said it plans to use that know-how to expand into automotive markets in Europe and the Americas.

This would not be the first time HCL Tech has sought to expand into new business arenas.

Mr Nadar, an engineer by training, earned his billions by pivoting HCL Tech from making personal computers to capitalise on demand for inexpensive back-office operations from the early 1990s.

Updated: July 17, 2023, 5:27 AM